The independent complaints investigator, the Financial Ombudsman Service, has revealed that in every case where a customer has complained about a rate increase, the card company has failed to prove the reasons for it.
As a result, borrowers have had their rate put back down.
A spokesman for the Ombudsman says: ‘We expect to see evidence that the card companies have actually assessed the borrower’s risk.
‘Whenever we ask to see this information, we find that the card company moves to a settlement quite quickly.’
It is not enough for banks simply to say the risk of lending you money has increased.
They must prove you have become more of a risk – so ask to see this information or a full explanation of the price changes.
The new Lending Standards Board – a voluntary code of conduct – formed out of the old Banking Code Standards Board, will oversee credit assessment and the prices charged by credit cards.
›› Abbey has launched a no-fee home loan for borrowers with just a 10% deposit.
Following in the footsteps of rival Nationwide BS, the Spanish-owned bank is offering the deal for customers who have held a current account for six months.
The rate is a competitive 5.99% for a three-year fix, and is available for buyers only.
Monthly repayments on a £150,000 loan would be £966, and total cost over three years £34,776.
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